E-2 Treaty Investor Visa

Description

The treaty investor visa allows foreign nationals to enter the United States for the purpose of directing and developing substantial investments made in a U.S. business. By virtue of the various reciprocal treaties of trade and navigation between the United States and selected foreign countries, certain foreign investors may qualify for the E-2 treaty investor visa.

This highly desired non-immigrant visa is available to nationals of treaty countries who invest substantial funds into a United States business or enterprise and whose presence is necessary to direct and develop that business or enterprise. This visa classification has several significant advantages for qualified foreign investors.

Advantages

Ownership by Investor

The treaty investor visa specifically allows (requires) the investor to own the U.S. business. This ownership may be as an individual proprietor, majority partner, or majority corporate shareholder. Unlike many countries, there is no requirement that a U.S. citizen or resident owns any interest in the investment.

Duration

Once awarded, the E-2 visa status may be maintained indefinitely by the principal investor by maintenance of the proper status of the business enterprise in the United States. Extensions can be granted by the Immigration and Naturalization Service or the U.S. State Department.

Short Processing Time

Since the E-2 is a non-immigrant visa, there is no need to satisfy a quota waiting period. Applications for change of status to E-2 in the United States require only 60 to 180 days depending upon the location of the INS office having jurisdiction over the investment enterprise.

For those investors making applications abroad, the processing time may vary from two months to as little as two days.

Permission to Work in U.S.

The E-2 visa allows the principal investor to be actively employed in the investment enterprise. They may be paid salary and/or draw dividends or receive benefits similar to those of United States workers.

Dependent spouses and children are able to work while having E-1 visa status after obtaining an employment authorization document (EAD).

Includes Spouse & Children

Qualified investors are entitled to request E-2 status for their spouses and children. Spouses can maintain this status indefinitely, assuming that the principal investor continues to qualify and that the marriage continues intact.

Children can retain E-2 status until they reach 21 years of age.

Includes Key Employees

For those businesses with a sufficient number of United States employees, additional E-2 visas may be available for key managerial employees who are determined by the United States State Department to be necessary to the operation of the business in the United States.

The number of employee E-2 visas depends on the size and complexity of the United States enterprise.

The dependents of the key E-2 employee are entitled to derivative status as in the case of the primary E-2 investor. These dependents may remain in the United States in E-2 visa status as long as the key E-2 employee remains employed by the E-2 business.

The E-2 enterprise must continue to exist and continue to satisfy the investment criteria of the treaty. (For example, the enterprise must remain owned 51 percent by the investors of the treaty country, must remain active in nature, and must maintain a substantial investment in the United States.)

Dependents Permitted to Attend School or College

The treaty investor and key employees may attend school on their E-2 visa status. Their dependents are permitted to attend school or college until their 21st birthday without obtaining additional visas so long as they continue to qualify under the E-2 criteria. (Many colleges will allow attendance but will consider the E-2 students to be non-residents for tuition purposes.)

Ownership of Real Estate

E-2 visa holders are free to purchase homes or other real estate while in the United States. Upon termination of E-2 status, the investors are not required to liquidate these holdings. (However, loss of visa status may affect the ability to enter and remain physically present within the United States.)

Requirements

Substantial Investment

Each investor must demonstrate that they have invested a substantial amount of capital into a new or existing United States business. There is no specific amount that qualifies as a minimum investment. Instead, the amount invested will be viewed on a qualitative basis, taking into consideration the nature of the business and the amount of capital necessary to establish that type of business on a successful basis.

To determine whether an investment is substantial, the Immigration & Naturalization Service and the State Department utilize a proportionality test. This test compares the amount of qualifying funds actually invested against the total costs of purchasing an existing business or the total cost of establishing a newly created business and making it operational.

If the amount of capital actually invested is the same as the cost, the investment is considered to be 100 percent of the required funds, and is considered "substantial."

For those investments that are not 100 percent, the higher the cost of the business, the greater the amount of financing against the business assets is allowed.

The State Department has published an illustrative sliding scale as follows:

Total Costs of Business $ 50,000.00 $100,000.00 $500,000.00 $1,000,000.00 $10,000,000.00 $100,000,000.00

Percentage Cash Required 100 percent 75 to 100 percent 60 percent 50 to 60 percent 30 percent 10 percent

Funds Committed

In order to qualify the investment, the funds must be "at risk." Some credit may be allowed for capital reserves or operating reserves where appropriate and necessary to the particular type of investment. The funds must be in the United States and either paid, in trust, or, in some cases, under contract.

Nationality of Investor

The investor must be a national of the treaty country through which reciprocal investment is allowed. Visa status is not available to investors who are merely residents of the treaty country, or who hold "inferior" passports due to secondary nationality status within the treaty country.

The countries that currently qualify as treaty-investor countries are set forth in Exhibit B following this section.

Control by Investor

The E-2 investor must control the investment which they seek to direct and develop. Control is generally considered to be a minimum of 50 percent ownership of the enterprise.

Not Marginal

The investment must not be a marginal enterprise solely for the purpose of earning a living. The investor must demonstrate that either there is income or financial resources from other sources to support the investor and the family, or that the investment will expand job opportunities locally and/or have a significant impact on the local economy.

Active Enterprise

The enterprise must be "active" in nature. This activity serves as the justification for the investor's presence to direct and develop the enterprise. The "active" requirement is evaluated on a case-by-case basis. Clearly, there must be an "on location" management need arising from the investment's activity in the United States.

U.S. Citizens Employed

An investment that does not create employment for United States citizens or residents may be considered to "merely create a job for the principal investor." This conflicts with the marginality concept inherent in the investment treaty. There is no specific number of employees required, but the number should be consistent with the nature of the enterprise. A large number of United States employees often merits favorable consideration.

Past History of Enterprise

The operating history and success of an existing enterprise are considered in evaluating the investment. Factors such as prior profits, payroll, growth, and longevity of the enterprise will provide a qualitative guide for assessing the prospective investment's potential.

Direct & Develop

The principal investor must demonstrate that they are coming to the United States to "direct and develop" the investment enterprise. The nature of the investment should dictate the need for the investor to be physically present in the United States.

Investor's Acumen

The prior education, training, and work experience are relevant considerations in granting the E-2 status. Depending upon the sophistication of the investment enterprise, there is a corresponding need for the investor to possess adequate acumen to direct and develop the investment enterprise. This is a qualitative analysis that can take into account any relevant factors that support the investor's abilities to manage the investment.

Exhibit B

List of Treaty Investor Countries (Updated April 1, 1999)

Argentina, Armenia, Australia, Austria, Bangladesh, Belgium, Bulgaria, Cameroon, Canada, China, (Taiwan), Colombia, Congo, Costa Rica, Czech Republic, Ecuador, Egypt, Estonia, Ethiopia, Finland, France, Georgia, Germany, Grenada, Honduras, Iran, Ireland, Italy, Jamaica, Japan, Kazakhstan, Korea, Kyrgyzstan, Latvia, Liberia, Luxembourg, Mexico, Moldova, Mongolia, Morocco, Netherlands, Norway, Oman, Pakistan, Panama, Paraguay, Philippines, Poland, Romania, Senegal, Slovak, Republic, Spain, Sri Lanka, Suriname, Sweden, Switzerland, Thailand, Togo, Trinidad/Tobago, Tunisia, Turkey, Ukraine, United Kingdom, Yugoslavia, and Zaire.

Intent to Depart U.S.

The investor must demonstrate an ability and willingness to depart the United States upon termination of E-2 status.

Limitations

Renewal Requirement

Since the E-2 visa is a non-immigrant visa, it must be renewed periodically to allow the investor and their qualified dependents to remain in the U.S. Renewal periods vary from one to a maximum of five years.

Maintenance of Visa

Each of the requirements for obtaining E-2 status must be maintained throughout the term of the visa status. Failure to maintain these requirements will lead to termination of the E-2 status of the investor and their dependents.

Non-Convertible to Permanent Residence

The E-2 visa is not generally convertible to lawful permanent residence status. The issuance of this visa does not preclude the investor from qualifying for permanent residence in the United States by alternative means.

Summary

The treaty investor visa offers excellent opportunities for investors and their families to live and work in the United States, while also enjoying the potential financial profits of their investments. With proper legal and financial guidance, the investor can qualify for this highly beneficial visa status.